AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH __, 2000
REGISTRATION NO. ________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
GENEREX BIOTECHNOLOGY CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 82-0490211
- -------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
33 HARBOR SQUARE, SUITE 202
TORONTO, ONTARIO
CANADA M5J 2G2
416/364-2551
-----------------------------------------------------------------
(Address, including zip code and telephone number,
including area code, of registrant's principle executive offices)
E. Mark Perri, Chairman
and Chief Financial Officer
33 Harbor Square, Suite 202
Toronto, Ontario
Canada M5J 2G2
416/364-2551
copies to:
Joseph Chicco, Esquire
Eckert Seamans Cherin & Mellott, LLC
1515 Market Street - 9th Floor
Philadelphia, PA 19102
215/851-8410
---------------------------------------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Approximate Date of Commencement of Proposed Sale to the Public:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. |_|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
<PAGE>
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
Calculation of Registration Fee
<TABLE>
<CAPTION>
Title of Each
Class of Amount Proposed Maximum Proposed Maximum Amount of
Securities to be To be Offering Price Aggregate Registration
Registered(1) Registered Per Share Offering Price Fee
---------------- ---------- ---------------- ---------------- ------------
<S> <C> <C> <C> <C>
Common Stock,
$.001 par value (1) 47,056 shares $ 4.25 $ 199,988 $ 53.
150,000 shares 6.00 900,000 238.
50,000 shares 7.50 375,000 99.
25,273 shares 5.50 139,002 37.
388,235 shares 7.00 2,717,645 717.
Common Stock,
$.001 par value (2) 874,183 shares $14.05(3) $12,282,271(3) $3,243.(3)
Totals 1,508,656 shares $ 4.25 to $16,613,906 $4,386.
$14.05
</TABLE>
- ------------------
(1) These shares are issuable upon the exercise of common stock purchase
warrants issued or committed to be issued in connection with prior
private placements and investment banking agreements, as follows:
47,056 warrants expiring January 7, 2005, exercisable at $4.25
25,273 warrants expiring April 26, 2004, exercisable at $5.50
50,000 warrants expiring February 16, 2004, exercisable at $6.00
100,000 warrants expiring April 6, 2004, exercisable at $6.00
388,235 warrants expiring January 7, 2003, exercisable at $7.00
50,000 warrants expiring April 6, 2004, exercisable at $7.50
(2) These shares are being offered by certain of our shareholders.
(3) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457. Pursuant to Rule 457(c), the proposed maximum
offering price per share and registration fee of outstanding shares are
based on the average of the closing bid ($14.00) and asked ($14-3/32)
prices of our common stock on March 27, 2000, as reported on the NASD OTC
Bulletin Board.
WEHEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE
NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL WE FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER
BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF
1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE
AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
ii
<PAGE>
LEGEND FOR FIRST PAGE OF PROSPECTUS:
We will amend and complete the information in this Prospectus. Although we are
permitted by US federal securities law to offer these securities using this
Prospectus, we may not sell them or accept your offer to buy them until the
documentation filed with the SEC relating to these securities has been declared
effective by the SEC. This Prospectus is not an offer to sell these securities
or our solicitation of your offer to buy these securities in any jurisdiction
where that would not be permitted or legal.
iii
<PAGE>
Subject to completion, dated march __, 2000
Prospectus
1,508,656 Shares
GENEREX BIOTECHNOLOGY CORPORATION
Common Stock
Generex is a development stage company and has not received any revenues
from operations to date. This prospectus relates to an offering of 1,508,656
shares of Generex common stock, as follows:
o We are offering 634,473 shares for sale at prices ranging from $4.25 to
$7.50 per share to holders of certain of our warrants upon exercise of the
warrants.
o Certain of our existing shareholders are offering a total of 874,183
outstanding shares for sale for their own accounts. We will not receive any
proceeds from shares sold by the selling shareholders.
Neither we nor the selling shareholders have engaged any underwriter or
selling agent to assist us in the sale of the shares covered by this prospectus.
Inter-dealer "bid" and "asked" price for Generex common stock are quoted on
the NASD OTC Electronic Bulletin Board under the symbol GNBT.OB. The OTC
Electronic Bulletin Board also reports prices at which shares are sold, and
daily sales volume. The closing inter-dealer "bid" and "asked" prices reported
for our common stock on March 27, 2000, were $14 and $14-3/32, respectively.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. See "Risk
Factors" beginning on page 4 of this Prospectus.
----------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined
whether this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
----------------------------------
The date of this Prospectus is ________ __, 2000.
<PAGE>
TABLE OF CONTENTS
PROSPECTUS SUMMARY..................................................... 3
NOTE ABOUT FORWARD LOOKING STATEMENTS.................................. 4
RISK FACTORS........................................................... 5
AVAILABILITY OF ADDITIONAL INFORMATION................................. 9
DILUTION............................................................... 10
USE OF PROCEEDS........................................................ 10
SELLING SHAREHOLDERS................................................... 11
PLAN OF DISTRIBUTION................................................... 12
LEGAL MATTERS.......................................................... 12
EXPERTS................................................................ 13
Our common stock is being offered by this prospectus only in jurisdictions
where offers and sales are permitted by applicable law.
In making a decision whether or not to buy any shares offered by this
prospectus you should rely only on the information contained in the prospectus.
We have not authorized anyone to provide you with information different from the
information in the prospectus. The information in the prospectus is accurate
only as of the date of the prospectus, regardless of the time the prospectus is
delivered or any shares are sold.
In this prospectus, unless the context indicates otherwise, the terms
"Generex", "we", "us" and "our" refer to Generex Biotechnology Corporation.
For investors outside the United States: Neither we nor, to our knowledge,
any other person has done anything that would permit this offering or possession
or distribution of this prospectus in any jurisdiction where action for that
purpose is required, other than in the United States. You are required to inform
yourselves about and to observe any restrictions relating to this offering and
the distribution of this prospectus.
2
<PAGE>
PROSPECTUS SUMMARY
General
Generex is a Delaware corporation engaged in the research and development
of drug delivery systems and technology. Our executive offices are located at 33
Harbour Square, Suite 202, Toronto, Canada M5J 2G2, and our telephone number at
that address is 416/364-2551.
We are a development stage company. To date, we have devoted a substantial
majority of our efforts and resources in developing a technology to orally
administer "large molecule" drugs, including proteins, hormones, peptides,
vaccines and other pharmaceutical products. Large molecule drugs, such as
synthetic insulin, are now administered almost exclusively by injection because
their molecular size makes it difficult or impossible for the body to absorb
them if they are administered by other means.
The initial application of our large molecule drug delivery technology is
an oral insulin formulation for use in the treatment of diabetes. The
formulation is sprayed into the mouth using a hand-held aerosol applicator.
Absorption occurs through the mucous membranes in the mouth and upper
gastro-intestinal tract.
We presently are conducting clinical trials of our oral insulin formulation
in the United States, Canada and Europe. There are numerous risks and
uncertainties that we must overcome before we will be able to market this or any
other product, including the risk that we may not obtain the necessary
regulatory clearances. We have not received regulatory approval to market the
product in any country, and do not expect to receive regulatory approval to
market the product in any country until the first quarter of 2001 at the
earliest.
We believe that the technology upon which our oral insulin formulation is
based can be used successfully with other large molecule drugs. We have engaged
in pre-clinical research and development work on two other applications, but we
have not devoted significant resources to this effort.
The Offering
<TABLE>
<S> <C>
Shares offered by Generex................................................. 634,473 shares
Outstanding shares offered by selling shareholders........................ 874,183 shares
Total................................................. 1,508,656 shares
</TABLE>
The shares offered by Generex are being offered only to the holders of
outstanding warrants. These warrants were issued in connection with private
placements that we completed in April/May 1999 and January 2000. We will refer
to these warrants in this prospectus as the "Placement Warrants" to distinguish
them from other warrants that we have issued. We will refer to the shares which
would be issued upon exercise of the Placement Warrants as the "Placement
Warrant Shares."
We will refer to the Generex shareholders who are selling shares covered by
this prospectus for their own accounts as the "Selling Shareholders".
3
<PAGE>
<TABLE>
<S> <C>
Common stock outstanding before the offering.............................. 15,246,804 shares
Common stock to be outstanding after the offering......................... 15,881,337 shares
</TABLE>
The number of shares of common stock stated to be outstanding after the
offering in the above table is based on shares outstanding before the offering
plus the Placement Warrant Shares, i.e., the number assumes that all Placement
Warrants are exercised. The holders of the Placement Warrants are not committed
to exercise these Warrants, however, and we may not sell any Placement Warrant
Shares. In addition, holders of Placement Warrants may use a "cashless" form of
exercise in which the difference between the exercise price of the Warrant and
the market price for our publicly traded shares is applied to the purchase price
of Placement Warrant Shares. If the "cashless exercise" method is used, fewer
Placement Warrant Shares will be issued than if the Placement Warrants were
exercised for cash. A more detailed explanation of the "cashless exercise"
feature of the Placement Warrants is set forth under the caption "Use of
Proceeds".
Neither the shares indicated as outstanding before the offering or to be
outstanding after the offering includes any outstanding options or warrants to
purchase our common stock other than the Placement Warrants.
NOTE ABOUT FORWARD-LOOKING STATEMENTS
We have made statements under the captions "Risk Factors" and "Use of
Proceeds" in this prospectus that are forward-looking statements. Similar
statements are made in documents that we have incorporated by reference into
this prospectus. You can identify these statements by forward-looking words such
as "may", "will", "expect", "anticipate", "believe," "estimate," and similar
terminology. Forward-looking statements address, among other things:
o implementing our clinical programs and other aspects of our business
plans;
o financing goals and plans; and
o our expectations of when regulatory approvals will be received or other
actions will be taken by parties other than us.
We believe it is important to communicate our expectations to our
investors. However, there may be events in the future that we are not able to
accurately predict and/or which we do not fully control that will cause actual
results to differ materially from those expressed or implied by our
forward-looking statements. Although we believe that the expectations reflected
in our forward-looking statements are reasonable, we cannot guarantee future
results, levels of activity, performance or achievements. Our forward looking
statements are made as of the date of this prospectus, and we assume no duty to
update them or to explain why actual results may differ.
4
<PAGE>
RISK FACTORS
You should carefully consider the following risks and other information in
this prospectus before deciding to purchase our common stock. The market price
of our common stock could decline due to any of these risks, and you could lose
all or part of your investment. This statement of risks is not intended to be
exhaustive, i.e., these are not the only risks relating to our common stock,
this offering or our business.
We Have Not Yet Sold Any Products Or Received Regulatory Approval To Sell Our
Products.
We are a development stage company. We have engaged primarily in research
and development activities since our inception, and have not received any
revenues from operations. We have no products approved for commercial sale by
drug regulatory authorities and only one product, our oral insulin formulation,
for which we have begun the regulatory approval process.
We May Not Achieve Commercial Success Even If Our Products Are Approved for
Sale.
Even if we obtain the required regulatory approvals to market our oral
insulin product, there are many factors which may prevent us from ever
successfully selling the product in commercial quantities. Some of these factors
are beyond our control, such as:
o acceptance of the formulation by health care professionals and
diabetic patients; and
o the availability, effectiveness and relative cost of alternative
diabetes treatments which may be developed by competitors.
We Have No Arrangements To Obtain Insulin In Commercial Quantities.
We need a supply of synthetic insulin to produce our oral insulin
formulation. There are a limited number of suppliers of synthetic insulin, with
two companies controlling a substantial majority of the world's supply. At the
present time, we have no agreement or other understanding with any company to
supply insulin to us in commercial quantities.
We Cannot Succeed Unless We Obtain Additional Capital.
We have incurred substantial losses from operations from our inception, and
expect to continue to incur substantial losses for at least another 12 to 18
months. During this 12 to 18 month period, we do not expect to obtain
significant revenues from operations but will need substantial funds, primarily
for the following purposes:
o to conduct clinical trials of our oral insulin product and otherwise
pursue regulatory approvals for this product;
o to begin to develop new products based on our oral delivery
technology, and to conduct the clinical tests necessary to develop and
refine new products; and
o to establish and expand our manufacturing capabilities.
To finance our operations to date, we have relied almost entirely on
private offerings of common stock at prices below the current market price of
our common stock. The terms on which we obtain additional financing may dilute
the investment of existing shareholders, or otherwise adversely affect their
position. It is also possible that we will be unable to obtain the additional
funding we need as and
5
<PAGE>
when we need it. If we were unable to obtain additional funding as and when
needed, we could be forced to delay the progress of our development efforts.
These delays would delay our ability to bring a product to market and obtain
revenues, and could result in competitors developing products ahead of us and/or
in our being forced to relinquish rights to technologies, products or potential
products. Because of the uncertainties in our ability to satisfy our future
financing needs, our auditors' report on our financial statements for the years
ended July 31, 1999 and 1998 contains an explanatory paragraph regarding our
ability to continue as a going concern.
We Will Depend Upon Others For Marketing And Distributing Our Products.
We currently lack marketing and sales experience and personnel,
distribution channels and other infrastructure needed to successfully market and
distribute a product. Accordingly, we intend to rely on collaborative
arrangements with one or more other companies which possess strong marketing and
distribution resources to perform these functions. We do not, however, have any
agreements with other companies for marketing or distributing our products. We
may be forced to enter into contracts for the marketing and distribution of our
products which substantially limit the potential benefits to us from
commercializing these products. In addition, we will not have the same control
over marketing and distribution that we would have if we conducted these
functions ourselves.
We Have No Experience In Manufacturing and Insufficient Capacity to Produce
Product In Large Quantities.
To date, we have produced our oral insulin formulation only under
laboratory conditions on a small scale. We have established a pilot
manufacturing facility that we believe is capable of producing the product at
levels necessary to supply our needs for late stage human clinical trials of the
product and for initial commercial sales outside the United States. However, we
have not yet actually produced product at those levels. In any event, we will
need to significantly increase our manufacturing capability to manufacture our
product in commercial quantities. We have no experience in resolving the
staffing, manufacturing, regulatory and quality control problems that are likely
to come up in developing and running a large scale manufacturing operation. Our
failure to solve problems of this nature could delay or prevent our ability to
bring the product to market and inhibit sales after the product comes to market.
We Are Dependent On Our Executive Management And Other Personnel.
Our business could be materially harmed if one or more members of our
limited scientific and management staff were unable or unwilling to continue
their association with us. We do not have fixed term agreements with any of our
key management or scientific staff, other than Dr. Pankaj Modi. The fact that we
have a fixed term contract with Dr. Modi, however, does not guarantee his
continued availability.
We depend upon non-employee consultants to assist us in formulating
research and development strategy, in preparing regulatory submissions, in
developing protocols for clinical trials, and in designing, equipping and
staffing our manufacturing facilities. These consultants and advisors usually
have the right to terminate their relationship with us on short notice. Loss of
some of these key advisors could interrupt or delay our business plan.
We will continue to need qualified scientific personnel and personnel with
experience in clinical testing, government regulation and manufacturing. We may
have difficulty in obtaining qualified scientific and technical personnel as
there is strong competition for these people from other pharmaceutical and
biotechnology companies as well as universities and research institutions.
6
<PAGE>
Our Reliance On Patents And Other Proprietary Technologies Exposes Us To
Significant Risks.
Our long-term success will substantially depend upon protecting our
technology from infringement, misappropriation, discovery and duplication. The
first patent applicable to our large molecule delivery technology was issued in
the US on January 25, 2000. We also have twelve patent applications pending in
the US and foreign jurisdictions, and two Canadian patents for which there is no
US counterpart, which cover our drug delivery technologies. We also own an
indirect interest in three drug delivery patents held by another company which
is fifty (50%) percent owned by us.
We cannot be sure that any of our pending patent applications will be
granted, or that any patents which we own or obtain in the future will fully
protect our position. Our patent rights, and the patent rights of biotechnology
and pharmaceutical companies in general, are highly uncertain and include
complex legal and factual issues. We believe that our existing technology and
the patents which we hold or have applied for do not infringe any one else's
patent rights, and that they will provide meaningful protection against others
duplicating our proprietary technologies. We cannot be sure of this, however,
because of the complexity of the legal and scientific issues that could rise in
litigation over these issues. Furthermore, patent applications are maintained in
secrecy in the United States until the patents are approved, and in most foreign
countries for a period of time following the date from which priority is
claimed. Thus, we cannot be sure that any technology that we currently are
developing is not covered already by a third party's pending patent
applications.
We also rely on trade secrets and other unpatented proprietary information.
We seek to protect this information, in part, by confidentiality agreements with
our employees, consultants, advisors and collaborators. These agreements may be
breached, however, in which case the remedies available to us may not adequately
compensate us for our loss. Furthermore, trade secrets protection does not
protect us against a competitor's independent development of the same
technology.
Our Ability To Respond To Business Opportunities And Introduce New Products Is
Subject To Extensive Government Regulation Of Our Business.
Our research and development activities, and the eventual manufacture and
marketing of our products, are subject to extensive regulation by the Food and
Drug Administration in the United States and comparable regulatory authorities
in other countries. Among other things, extensive regulation puts a burden on
our ability to bring products to market. These regulations apply to all
competitors in our industry. However, many of our competitors have extensive
experience in dealing with FDA and other regulators while we do not. Also, other
companies in our industry do not depend completely on products which still need
to be approved by government regulators, as we now do. If we do not obtain
regulatory approvals for our products, or fail to comply with government
regulations in the future, our business will be substantially harmed.
We May Not Be Able to Compete with Diabetes Treatments Marketed By Other
Companies.
Our oral insulin product will compete with existing and new therapies for
treating diabetes, including administration of insulin by injection. We are
aware of a number of companies currently seeking to develop alternative means of
delivering of insulin, as well as new drugs intended to replace insulin therapy
at least in part. Most of our potential competitors are established firms that
have substantially greater financial resources than we do. In addition, several
competitors that are not themselves major companies have arrangements with major
pharmaceutical companies for financial, technical and marketing assistance.
Thus, even if our product is technically competitive with other products we may
be unable to compete successfully due to our limited resources.
7
<PAGE>
Enforcement of a Recent Arbitration Award May Result In Dilution To
Stockholders.
Sands Brothers and Co. Ltd., a New York City based investment banking and
brokerage firm, initiated an arbitration against us in 1998 claiming that it had
the right to receive warrants to purchase, for nominal consideration, shares of
our common stock pursuant to a letter agreement dated October 9, 1997. We
defended the claim on the basis that the letter agreement was not a binding
contract. In October 1999 we were informed that the arbitration panel that heard
this case had awarded Sands Brothers $14,070 and issued a declaratory judgment
to the effect that we are required to issue to Sands Brothers a warrant to
purchase 1,530,020 shares of our common stock pursuant to and in accordance with
the terms of the October 9, 1997 letter agreement. Thereafter, we filed a motion
in New York state court to set the award aside. On March 16, 2000, the court
denied our motion and granted Sands Brothers' petition to confirm the award. We
intend to appeal this decision. Investors should be aware, however, that the
grounds upon which courts will overturn an arbitration award are limited, in
this case essentially to the argument that the arbitrators manifestly
disregarded the law and/or exceeded their authority in rendering their award.
Our ultimate legal and financial liability in this matter, including a
range of possible losses with respect to the award, cannot be estimated at this
time. To the extent that Sands Brothers receives shares of our common stock for
little or no consideration as a result of this arbitration award, our existing
shareholders' investment would be proportionately diluted.
We Have Substantial Exposure To Product Liability.
The use of our products in clinical trials and the commercial sale of our
products exposes us to liability claims by consumers and pharmaceutical
companies. We have obtained limited product liability insurance of two million
dollar per occurrence and total coverage. We cannot be sure that this would be
sufficient coverage in the case of any substantial liability claim.
The Price Of Our Shares May Be Volatile.
There may be wide fluctuation in the price of our shares. Because of this
potential volatility, our shares may be an unsuitable investment for investors
who might be required to sell the shares at a time when the market price of the
shares is depressed. These fluctuations may be caused by several factors
including:
o announcements of research activities and technology innovations or new
products by us or our competitors;
o changes in market valuation of companies in our industry generally;
o variations in operating results;
o changes in governmental regulations;
o results of clinical trials of our products or our competitors'
products; and
o regulatory action or inaction on our products or our competitors'
products.
8
<PAGE>
Our Outstanding Special Voting Rights Preferred Stock And Provisions of Our
Certificate of Incorporation Could Delay Or Prevent The Acquisition Or Sale Of
Generex.
Holders of our Special Voting Rights Preferred Stock have the ability to
prevent any change of control of Generex. Our Vice President of Research and
Development, Dr. Pankaj Modi, owns all of our Special Voting Rights Preferred
Stock. In addition, our Certificate of Incorporation permits our Board of
Directors to designate new series of preferred stock and issue those shares
without any vote or action by the shareholders. Such newly authorized and issued
shares of preferred stock could contain terms which grant special voting rights
to the holders of such shares which make it more difficult to obtain shareholder
approval for an acquisition of Generex or increase the cost of any such
acquisition.
Future Sales Of Shares By Current Shareholders May Adversely Affect The Price Of
Our Stock.
The market price of our common stock could decline as a result of sales of
a large number of shares in the market by Selling Shareholders or other existing
shareholders, as well as Placement Warrant holders who receive Placement Warrant
Shares in this offering.
We Have Engaged In Numerous Transactions With Our Affiliates.
We previously have engaged in numerous transactions with our affiliates
which were not the result of arms-length negotiations. For that reason,
institutional investors and other potential purchasers of our shares may be less
willing to do so due to a belief that the terms of these transactions may not be
as favorable to Generex as could have been obtained through arms-length
negotiations with nonaffiliated parties.
AVAILABILITY OF ADDITIONAL INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission ("SEC"). Our filings are
available to the public over the internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file at the SEC's
Public Reference Rooms in Washington, D.C., New York, New York and Chicago,
Illinois. The Public Reference Room in Washington, D.C. is located at 450 Fifth
Street, N.W. Please call the SEC at 1-800-SEC-0330 for further information on
the Public Reference Rooms.
The SEC allows us to "incorporate by reference" in this prospectus the
information we file with it, which means that we can disclose important
information to you by referring you to those documents. Information incorporated
by reference is an important part of this prospectus, and information that we
file later with the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed below and any
future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until all shares offered by this prospectus are
sold:
o Annual Report on Form 10-K for the fiscal year ended July 31, 1999.
o Quarterly Report on Form 10-Q for the quarter ended October 31, 1999.
o Quarterly Report on Form 10-Q for the quarter ended January 31, 2000.
o Current Report on Form 8-K filed March 2, 2000.
o Current Report on Form 8-K filed March 27, 2000.
9
<PAGE>
o The description of our common stock contained in our registration
statement on Form 10 filed on December 14, 1998, and amended February
24, 1999, including any amendment or report subsequently filed for the
purpose of updating the description.
o All other reports filed in accordance with Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 after July 31, 1999.
This prospectus is part of a registration statement on Form S-3 filed with
the SEC under the Securities Act of 1933. This prospectus does not contain all
of the information set forth in the registration statement. You should read the
registration statement for further information about Generex and our common
stock. You may request a copy of these filings at no cost. Please direct your
requests to Rose C. Perri, Secretary and Chief Operating Officer, 33 Harbor
Square, Suite 202, Toronto, Ontario, Canada M5J 2G2 (telephone 416/364-2551).
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. You should not assume
that the information in this prospectus or any prospectus supplement is accurate
as of any date other than the date on the front page of those documents.
DILUTION
Purchasers of common stock offered pursuant to this prospectus will incur
dilution in their investment that is approximately equal to the difference
between the price which they pay for the shares and the net tangible book value
of the shares. On January 31, 2000, our net tangible book value was
approximately $6.3 million, or approximately $.41 per share of common stock.
USE OF PROCEEDS
We will not receive any proceeds from the sale of shares by the Selling
Shareholders.
The net proceeds from the sale of the Placement Warrant Shares, if all the
Placement Warrants were exercised, would be approximately $4.3 million after
deducting expenses of this offering which we estimate will be approximately
$40,000. Proceeds from any sales of the Placement Warrant Shares will be added
to the funds that we now have on hand, and will be used primarily to continue
the clinical trials of our oral insulin formulation, in the research and
development of other products, and for general and administrative expenses. The
receipt of proceeds from the sale of the Placement Warrant Shares will not
eliminate our need for additional financing, even if all Placement Warrants are
exercised.
In addition to exercising their Placement Warrants for cash, holders of
Placement Warrant may exercise their Placement Warrants using a "cashless"
exercise method. Under this method, a holder may use the "equity value" of his
Placement Warrants to exercise other Placement Warrants without paying
additional money. The equity value of a Placement Warrant for this purpose is
the difference between the market value of our common stock on the date the
Placement Warrant is exercised and the exercise price of the Placement Warrant.
To illustrate this method, if the market price of our common stock were $15.00
and the exercise price of a Placement Warrant is $6.00, the equity value of the
Placement Warrant would be $7.50. In such a case, a holder of such Placement
Warrants could use the equity value of one Warrant to pay the exercise price of
a second Placement Warrant exercisable at $7.50 per share, i.e., the holder
would deliver two Placement Warrants to us for cancellation and we would issue
one fully paid
10
<PAGE>
share of common stock to the holder. Thus, to the extent that holders of
Placement Warrants use the cashless exercise method to exercise their Placement
Warrants, cash proceeds to us from exercise and the number of Placement Warrant
Shares issued upon exercise of the Placement Warrants would be reduced.
SELLING SHAREHOLDERS
The following table lists each Selling Shareholder and holder of Placement
Warrants and, in addition, sets forth:
o the number of shares of common stock beneficially owned by each prior
to the offering;
o the number of shares of common stock registered for sale by each in
the offering; and
o the percentage of common stock owned by each after the offering,
assuming each sells all of the shares registered for his/her/its
benefit.
<TABLE>
<CAPTION>
Shares Owned
Beneficially Placement After the
Owned Outstanding Warrant Offering/
Prior to Shares Shares Percentage
Name Offering Registered Registered Of class
- ----------------------- ------------ ----------- ---------- ------------
<S> <C> <C> <C>
Cranshire Capital, L.P. 357,070 277,657 79,413 *
Keyway Investments, Ltd. 339,840 260,427 79,413 *
Lionhart Investments Ltd. 164,704 94,117 70,587 *
Howard Todd Horberg 102,942 58,824 44,118 *
Steve Levy 102,942 58,824 44,118 *
The dotCom Fund LLC 82,353 47,059 35,294 *
Coleman & Company Securities, Inc. 50,000 0 50,000 *
Philip C. Puccio, Sr. 86,178 0 86,178 (1) *
Ernest G. Pellegrino 86,178 0 86,178 (1) *
ICN Capital Ltd. 59,092 59,092 0 *
Zazoff Associates LP 24,224 0 20,587 (1) *
Patrick G. Nolan 24,224 0 20,587 (1) *
Gilford Partners, LP 18,182 18,182 0 *
Teddy Ishak 18,000 0 18,000 *
James E. Port 15,000 0 15,000 *
James N. Baxter 8,182 0 8,182 *
Barbara Brooks-Baxter 909 0 909 *
------------ ------------ ----------
1,540,020 874,183 634,473
</TABLE>
- ------------
*Less than one percent
(1) Includes, in each case, 11,764 shares issuable upon the exercise of
Placement Warrants issued in January 2000, and an additional 8,823 shares
that are issuable upon the exercise of warrants that are issuable only upon
exercise of the outstanding Placement Warrants.
11
<PAGE>
Coleman & Company Securities, Inc. and GIA Securities, Inc. have acted as
agents for us in connection with the private placement of certain of the
securities which may be resold pursuant to this prospectus. Messrs. Puccio,
Pellegrino, Ishak and Port are employees of Coleman, and James Baxter and
Barbara Brooks-Baxter are employees of GIA. None of the other persons for whose
benefit shares are registered for sale now holds or within the past three years
has held any office or position with us, or had any material relationship with
us other than as an investor.
PLAN OF DISTRIBUTION
We will sell the Placement Warrant Shares to holders of the Placement
Warrants only upon the exercise of such Warrants. If all outstanding Placement
Warrants were exercised for cash, we would issue 634,473 Placement Warrant
Shares and would receive $4,331,655 in payment for such Shares. As described
above under the caption "Use of Proceeds", holders of Placement Warrants may use
the equity value of a portion of their Placement Warrants to exercise other
Placement Warrants. To the extent that holders of Placement Warrants use this
method of exercise, cash proceeds to us and the number of Placement Warrant
Shares issued upon exercise of the Placement Warrants would be reduced.
Shares of common stock which have been registered for sale by the Selling
Shareholders will be sold by them for their own accounts. We will not receive
proceeds from any of these sales.
Shares registered for sale by the Selling Shareholders may be offered and
sold by them from time to time as market conditions permit. Similarly, Placement
Warrant Shares that we sell upon the exercise of Placement Warrants may be
resold by the purchasers of such Shares from time to time as market conditions
permit. These sales and resale transactions may take place in privately
negotiated transactions or in the over the counter market, and may include large
block transactions and ordinary brokers' transactions. These transactions may
also include sales through one or more broker dealers who acquire and sell these
shares as principals. Sales may be at the prevailing market price at the time of
the sale, at prices relating to the prevailing market prices, such as at a
specified discount from or premium over the market price, or at a negotiated
price. Ordinary brokerage commissions may be paid by the sellers in connection
with the sales, or the sellers may specifically negotiate brokerage fees or
commissions in connection with the sales.
We are paying all expenses in connection with the registration of the
shares to be sold by the Selling Shareholders and the Placement Warrant Shares
offered by this Prospectus except that we will not pay any underwriting
discounts or selling commissions for any sales by holders of the Selling
Shareholders or resales of Placement Warrant Shares. We also will not pay any
transfer taxes or fees or expenses of counsel or other advisors to the Selling
Stockholders or the holders of Placement Warrants.
LEGAL MATTERS
The validity of the issuance of the shares of common stock offered in this
prospectus will be passed upon for us by Eckert Seamans Cherin & Mellott, LLC,
1515 Market Street, 9th Floor, Philadelphia, PA 19102. The firm of Eckert
Seamans Cherin & Mellott owns 158,172 shares of common stock which it received
in payment of legal fees and expenses in 1998 (60,000 shares) and the exercise
of warrants in June 1999 (98,172 shares). Members of the firm own additional
shares (less than one percent in total) that they purchased from time to time
for cash, either from us or in the public market.
12
<PAGE>
EXPERTS
Our financial statement as of and for the years ended July 31, 1999 and
1998, included in our Annual Report on Form 10-K for the year ended July 31,
1999 (our "1999 10-K") have been audited by Withum Smith & Brown, independent
accountants, as set forth in their report on such financial statements. The
report on these financial statements contains an explanatory paragraph
describing conditions that raise doubt about our ability to continue as a going
concern as described in Note 2 to the financial statements.
Our financial statements for the fiscal year ended July 31, 1997,
appearing in our 1999 10-K have been audited jointly by Withum, Smith & Brown
and Mintz & Partners, independent auditors, as set forth in their report on such
financial statements.
Our financial statements for the years ended July 31, 1999, 1998 and 1997
are incorporated by reference in this prospectus, and elsewhere in the
registration statement, in reliance upon the reports of Withum Smith & Brown and
Mintz & Partners on the financial statements, given on their authority as
experts in accounting and auditing.
13
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Registrant will pay all reasonable expenses incident to the
registration of shares other than any commissions and discounts of underwriters,
dealers or agents. Such expenses are set forth in the following table. All of
the amounts shown are estimates except the SEC registration fee.
SEC registration fee................................. $ 4,386
Legal fees and expenses.............................. 25,000
Accounting fees and expenses......................... 5,000
Other................................................ 5,614
-----
Total................................................ $40,000
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation's Law authorizes a
corporation to indemnify its directors, officers, employees or other agents in
terms sufficiently broad to permit indemnification (including reimbursement for
expenses incurred) under certain circumstances for liabilities arising under the
Securities Act. The Registrant's Certificate of Incorporation (Exhibit 3.1
hereto) and Bylaws (Exhibit 3.2 hereto) provide indemnification of its directors
and officers to the maximum extent permitted by the Delaware General Corporation
Law.
Under both registration rights agreements (Exhibits 4.1 and 4.2 hereto)
applicable to securities registered hereby, the Registrant has agreed to
indemnify the selling stockholders and persons controlling the selling
stockholders against certain liabilities, including liabilities under the
Securities Act of 1933, and the selling stockholders have agreed to indemnify
the Registrant, its directors, its officers and certain control and related
persons against certain liabilities, including liabilities under the Securities
Act of 1933.
ITEM 16. EXHIBITS.
Exhibit
Number Description
------- -----------------------------------------------------------------
3.1 Restated Certificate of Incorporation of Generex Biotechnology
Corporation filed as Exhibit 3.1 to our Quarterly Report on Form
10-Q for the quarter ended April 30, 1999, filed June 14, 1999,
is incorporated herein by reference.
3.2 Bylaws of the Company filed as Exhibit 3.2 to our Registration
Statement on Form S-1 filed July 12, 1999 ("1999 S-1") is
incorporated herein by reference.
4.1 Form of common stock certificate filed as Exhibit 4.2 with our
1999 S-1 is incorporated herein by reference.
II-1
<PAGE>
Exhibit
Number Description
------- -----------------------------------------------------------------
4.4.1 Form of Placement Warrants issued in 1999 to Coleman and Company
Securities, Inc., certain employees and officers of Coleman &
Company Securities, Inc. and certain officers of GIA Securities,
Inc., filed as Exhibit 4.4.1 to our 1999 S-1 is incorporated
herein by reference.
4.4.2 Form of Warrant issued in January 2000 to private placement
investors filed as Exhibit 4.2 with our Quarterly Report on Form
10-Q for the quarter ended January 31, 2000, filed on March 14,
2000 ("Q2 2000 10-Q") is incorporated herein by reference.
4.4.3 Form of Placement Warrants issued in January 2000 to certain
officers of Coleman and Company Securities, Inc. filed as Exhibit
4.3 to our Q2 2000 10-Q is incorporated herein by reference.
4.6 Registration Rights Agreement dated April 23, 1999, covering
shares of Common Stock issued in private placement in April and
May 1999 filed as Exhibit 4.6 to our 1999 S-1 is incorporated
herein by reference.
4.7 Registration Rights Agreement dated January 7, 2000 covering
shares of common stock and shares issuable upon the exercise of
Warrants issued in a private placement in January 2000 filed as
Exhibit 4.1 to our Q2 2000 10-Q is incorporated herein by
reference.
5* Opinion of Eckert Seamans Cherin & Mellott, LLC regarding the
legality of the securities being registered
23.1.1 Consent of Withum Smith & Brown, independent auditors
23.1.2 Consent of Mintz & Partners, independent auditors
23.1.3* Consent of Eckert Seamans Cherin & Mellott, LLC (included in
Exhibit 5)
*To be filed by amendment.
ITEM 17. UNDERTAKINGS.
We hereby undertake:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
II-2
<PAGE>
(b) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (a) and (b) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by us pursuant to Section
13 or Section 15(d) of the Exchange Act that are incorporated by reference
in the Registration Statement.
2. That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
3. To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
4. That, for the purpose of determining any liability under the Securities
Act, each filing of our annual report pursuant to Section 13(a) or Section 15(d)
of the Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
5. To deliver or cause to be delivered with the prospectus, to each person
to whom the prospectus is sent or given, the latest annual report to security
holders that is incorporated by reference in the prospectus and furnished
pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the
Exchange Act; and, where interim financial information required to be presented
by Article 3 of Regulation S-X are not set forth in the prospectus is sent or
given, the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial information.
6. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of Generex
pursuant to the foregoing provisions, or otherwise, Generex has been advised
that in the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by Generex of expenses incurred or paid by a director, officer, or
controlling person of Generex in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, Generex will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, we
certify that we have reasonable grounds to believe that we meet all of the
requirements of filing on Form S-3 and have authorized this Registration
Statement to be signed on our behalf by the undersigned, our President, on the
29th day of March, 2000.
GENEREX BIOTECHNOLOGY CORPORATION
/s/ Anna E. Gluskin
By: -----------------------------
Anna E. Gluskin, President
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated:
<TABLE>
<CAPTION>
Signature Title Date
- --------------------- -------------------------------------- --------------
<S> <C> <C>
/s/ Anna E. Gluskin
- --------------------- President, Chief Executive Officer and
Anna E. Gluskin Director March 29, 2000
/s/ E. Mark Perri
- --------------------- Chairman of the Board, Chief Financial
E. Mark Perri Officer and Director March 29, 2000
/s/ Rose C. Perri
- ---------------------
Rose C. Perri Director March 29, 2000
/s/ Pankaj Modi
- ---------------------
Pankaj Modi, Ph.D. Director March 29, 2000
</TABLE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in the Registration Statement of and related Prospectus of
Generex Biotechnology Corporation ("the Company") of our report dated September
17, 1999, except for Note 7, "Pending Litigation," paragraph 4, which is dated
October 20, 1999, on the consolidated financial statements of the Company as of
July 31, 1999 and 1998 and for the years then ended and our joint report with
Mintz & Partners dated October 15, 1998, on the consolidated financial
statements of the Company for the year ended July 31, 1997, which consolidated
financial statements appear in the Registration Statement. We also consent to
the references to us under the headings "Experts" in such Prospectus.
/s/ WithumSmith+Brown
- -------------------------
WithumSmith+Brown
New Brunswick, New Jersey
March 29, 2000
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in the Registration Statement of and related Prospectus of
Generex Biotechnology Corporation ("the Company") of our joint report with
Withum, Smith & Brown dated October 3, 1997, on the consolidated financial
Statements of the Company for the year ended July 31, 1997, which consolidated
financial statements appear in the Registration Statement. We also consent to
the references to us under the headings "Experts" in such Prospectus.
/s/ Mintz & Partners LLP
- -----------------------
MINTZ & PARTNERS LLP
Toronto, Ontario
March 29, 2000
